Personal Finances 101 Textbook: None. Course will be based on online essays and materials. Instructor: Mba Mbulu

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Class #3

Steps Toward Personal Financial Triumph

In the first class, we discussed "Establishing Your Income and Making Out A Budget." In the second class, Maintaining A Separate Spending Record, Developing the Ability to Resist Unplanned Buying, Recognizing that Businesses are Not in Operation to Help You Save Money, and Learning to Recognize When You are not Getting Sufficient Value for Your Money were discussed. Additionally, an experience with a credit card company was discussed which led to the following advice: (1) Never use a credit card until after you call the customer service office and get the terms of the card clarified and (2) Never pay an annual fee for a credit card. With all of that in mind, we will go into the third class.

(1) You must consistently check to see that you are being true to your budget and make the regular budgetary comparisons discussed in the January class. Additionally, keep the spending record discussed in the February class constantly in mind because it can reveal the source of additional funds and help you eliminate "wasteful" spending habits. Remember: You cannot spend haphazardly and survive. Nor can you spend on impulse or on the spur of the moment. You have to spend according to a plan. Otherwise you'll come up short each pay period and eventually drown in debt.

(2) Check your bills for errors--- bank statements, telephone bills, credit card bills, utilities bills, all types of bills, etc. Whenever you get a bill, check it for errors. Companies frequently make mistakes, and you work too hard to give them money they do not deserve. There are new businesses cropping up every day that revolve around auditing the bills, invoices and purchasing orders that large companies send to their customers, and the mistakes regularly found are many and close together. You can save some money by doing some auditing of your own and keeping the roguish hands of some businesses out of your wallet or pocketbook.

Check each bill item by item. If you make a purchase in a store, you might have been charged for an item twice, or for an item you did not purchase. A phone bill might include a call you did not make, or the charge per minute for calls might be lower than what they charge. A credit card bill might be charging you at the wrong interest rate. Credit cards offer so many "specials" that it is nearly impossible for their representatives to keep up with all of them. Additionally, humans are inputting the data, and we know how humans are when it comes to mistakes. Utility bills (water, electricity, gas, e.g.) are often incorrect as well. Every penny you save from the mistakes of others can add up to a tidy amount over the period of a few months or a year.

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CHASE

About two years ago, I received a telephone call from a customer service representative of the Chase credit card service. She informed me that I could transfer balances to Chase for a limited period and pay a 9.9% APR for the life of the balance (provided I did not lose my credit standing). I transferred a balance and asked that she send me a letter in writing stating the terms of that offer. About two weeks later, I received the letter. I read it, put it away and made a second transfer.

Six or seven months later, Chase started charging me almost 14% interest on the balance transfers. I called them and reminded them of the terms of our agreement. I was told that Chase had never made an offer like that and the representative quite coldly added that I would have to pay the balance on their terms whether I liked it or not. I photo-copied the letter I had received and sent them the copy. After too many phone calls and about 4 months later, Chase made an adjustment on the first balance transfer, but insisted that the second transfer was not covered by the letter. They were wrong and they knew it; I was right and they knew it; but the law would have supported them. They knew it and I knew it. I paid them off, wrote them a letter detailing the amount of interest income they had lost by being greedy, and stopped using their card.

NOTE: When you get an offer like this, one that is designed to save you money by giving you a lower interest rate, the credit card company can actually be setting you up for a ripoff (intentionally or unintentionally). You should always make the company explain how the lower interest rate balance will relate to your existing balance. If you have an existing balance at a high interest rate and add a balance at a lower interest rate, the credit card company will usually apply all payments to the low interest rate balance first. Only after the low interest rate balance has been paid off will payments go toward the high interest rate balance. If fairness prevailed, it would be a case of first bill made, first bill paid, but businesses are not about being fair when profits are concerned. The credit card companies look for ways to make as much profit as possible, and a higher interest rate balance will produce substantially more interest income if it is not paid than a low interest rate balance will produce.

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